- August 30, 2021
- Posted by: A4P
- Categories: Dropshipping, eCommerce
Amazon and Walmart
Walmart and Amazon are two of the largest stores in the world, but who wins? What are the unique differences between these two retail giants in the post-Covid era?
In many cases, Amazon and Walmart fight for the same customers. Both set the tone for other big box stores and online businesses as two of the world’s largest retail stores. You can expect that if Amazon or Walmart do something, other companies will fall into line.
In this article, we will discuss who wins in 2021—Amazon vs Walmart.
Growth | Amazon vs Walmart
Last quarter, Walmart’s namesake U.S. stores brought in 68 percent of the company’s revenue. Another 20% is derived from the company’s international outlets, with the rest of 12% coming from Sam’s Club warehouse clubs.
The pandemic fueled Walmart’s digital business, which includes in-store pickups, same-day delivery, and next-day shipments, but the company still relies largely on its physical locations.
While last quarter, Amazon’s North American retail segment, which includes Whole Foods Market, brought in 59 percent of the company’s revenue. Its foreign retail division contributed an additional 28% of revenue, while AWS (Amazon Web Services), the largest global cloud infrastructure platform, contributed 12%.
The pandemic boosted Amazon’s online shopping business, which topped 200 million Prime customers during the crisis, as well as AWS, which profited from increased online service usage. Furthermore, Amazon’s higher-margin cloud income supported its lower-margin retail divisions, accounting for 47 percent of the company’s operating profits.
Amazon can keep extending its Prime environment with discounts, low-cost hardware items, and digital incentives thanks to this virtuous cycle. Amazon has a significant advantage over Walmart and other merchants because of its particular strength.
SOURCE: The Motley Fool
Year-on-year growth of global Amazon Prime Day sales from 2016 to 2021 | Statista.com
Amazon’s sales increased by 38% to $386.1 billion in fiscal 2020, which corresponds to the calendar year, with a growth of 38% in its North American business, 40% in its international business, and 30% in AWS.
Even while it racked up billions in pandemic-related spending, its net income increased by 84 percent, and its EPS increased by 82 percent. Its free cash flow, which it doesn’t use for buybacks or dividends, increased 20% to $25.8 billion.
In the first quarter of fiscal 2021, the trend continued. Amazon’s revenue increased by 44% to $108.5 billion, its net income more than tripled to $8.1 billion, and its earnings per share increased by 215 percent. For the full year, analysts estimate revenue and earnings to increase by 27% and 34%, respectively.
Comparable sales growth of Walmart U.S. in the United States from the fiscal year 2006 to 2021 | Statista.com
In fiscal 2021, which ended in January, Walmart’s revenue increased by 7% to $559.2 billion. Walmart U.S. saw comparable-store sales rise 8.6%, with 79 percent growth in e-commerce, while Sam’s Club saw comps rise 11.8 percent. Walmart International’s sales increased 1% on a comparable basis, with Mexico, Canada, and Flipkart accounting for the majority of the increase.
Its corrected EPS increased by 11%, and its free cash flow (FCF) increased by 77% to $25.8 billion. Buybacks and dividends accounted for $8.7 billion of the total.
Walmart’s revenue increased 3% year over year to $138.3 billion in the first quarter of fiscal 2022. Walmart U.S. saw a 6% increase in comps, with a 37% increase in e-commerce, while Sam’s Club saw a 7.2 percent increase in comps.
Its worldwide sales dropped 8%, owing to a few divestments. Its adjusted earnings per share climbed by 43%.
Analysts estimate Walmart’s revenue to fall 1% for the full year because to the pandemic’s difficult year-over-year comparisons. However, they still estimate adjusted earnings to climb by 9%, thanks to buybacks.
Traffic | Amazon vs Walmart
According to recent data given by Similarweb (a site that monitors the digital world), total unique U.S. visitors to walmart.com WMT -0.3 percent have slowed from 47 percent year-over-year growth in Q4 2020 to just 23 percent year-over-year growth in Q1 2021.
While the study reveals that traffic is falling on a quarter-by-quarter basis, compared to last year’s performance is becoming more difficult (since March 2020 saw the start of lockdowns and soaring digital sales). For example, Walmart’s Q1 2021 unique visitors were 23% lower than in Q4 2020.
Amazon, on the other hand, saw a 12 percent increase in global traffic over the last three quarters, indicating that the company’s growth has not slowed.
Revenue | Amazon vs Walmart
Due to its physical presence, Walmart really outperforms Amazon in terms of revenue by a few hundred billion dollars. This is a significant point because, for those who believe that brick and mortar is dead, Walmart shows that consumers still shop in-store and that it can continue to compete with Amazon as it transitions to e-commerce.
The question is whether it can move quickly enough to take that market share, or whether it will shift into areas where Amazon is weak, such as banking.
E-commerce and Retail Market Share | Amazon vs Walmart
Amazon is still the clear eCommerce leader, accounting for approximately 40% of all eCommerce sales today. Even though the coronavirus outbreak damaged Amazon’s supply chain and drastically delayed Prime deliveries in early 2020, the company experienced a 25% increase in online sales—its strongest gain in at least 6 quarters.
However, in the same time period, operating profit in the North American business dropped substantially from $2.3 billion to $1.3 billion. COVID-related expenses amounted to almost $600 million. The firm itself raised questions when it announced plans to spend $4 billion in the second quarter on higher labor, PPE, and other COVID-related expenses.
In the longer term, Amazon is unlikely to be affected. As traditional retailers suffer significantly, if not permanent, setbacks in their brick-and-mortar operations, Amazon stands to benefit for years to come.
In 2020, Walmart reached a critical point. Walmart has surpassed eBay as the second-largest online retailer in the United States, after Amazon, for the first time. During the first quarter of 2020, its eCommerce sales increased by 74%.
When Amazon Prime orders were delayed for a month, aggregate Walmart Marketplace orders increased by 300 percent in early April. This is due in part to Walmart’s dominance as a physical retailer.
The corporation, which claims itself as the world’s largest retailer, operates over 5,000 outlets in the United States. These can serve as fulfillment facilities or pickup sites (as opposed to Amazon’s 200 North American warehouses).
Shipping and Fulfillment | Amazon vs Walmart
As a result, FBA is used by 73 percent of Amazon merchants to acquire access to the Prime badge. It’s become a requirement to compete on Amazon, but recent months have shown that relying solely on FBA is risky. When Amazon momentarily barred nonessentials from FBA in March 2020, tens of thousands of vendors were closed down.
Nonetheless, Amazon plans to invest heavily in its logistical operations. It recently stated that it would add 12 additional widebody cargo jets to its fleet of 81, reducing the top line of corporations like UPS by an estimated $100 billion.
Meanwhile, to compete with Prime, Walmart just introduced its own loyalty program, Walmart+. This includes rapid shipping as a primary feature. The company offers free, unrestricted same-day shipping on all food items. As well as other incentives, such as a scan-and-go system for in-store customers, via the program.
In addition, Walmart also advertises its two-day delivery program widely among its sellers. They offer free two-day shipping on orders over $35 (no membership needed). You can get two-day delivery tags on your listings if you join the TwoDay program. This will help you boost your search ranks and raise your buy box win rate.
Branding and Advertising | Amazon vs Walmart
Meanwhile, Walmart as a more traditional retailer is recognized for the brands it sells. Buyers are more likely to search or select products based on brand. However, the majority of searches still are probably generic.
Walmart, as you might think, has significantly fewer advertisements than Amazon. According to Teikametrics, only 1.6 percent of its vendors presently advertise, implying a lower CPC across the board.
Amazon vs Walmart: The Key Takeaway!
In this continuous power struggle, much remains to be seen. Amazon’s big online edge is partially offset by Walmart’s store presence.
Both platforms have their charm for sellers. Walmart has proven that it is in it for the long term, and many people are looking forward to seeing it acquire even more popularity.
On each platform, the road to success for sellers is different. On Walmart Marketplace, Amazon retailers should not expect the same level of results or customer experience. They may count on continuous progress over the next several years. Early adopters may see their businesses expand in lockstep with Walmart’s eCommerce expertise since Walmart continues to be an important growth prospect.